Spring 2022
The IN FOCUS Newsletter explores frequently discussed topics from Fisher Investments’ 401(k) plan participants. Inside you will receive exclusive insights and the latest market update from Fisher’s very own Investment Policy Committee.
Quarterly Market Update From Fisher Investments' Investment Policy Committee (IPC)
Your 401(k): What Are You Not Thinking About?
Visualize Your Retirement Readiness
How to Guard Against Scams and Financial Fraud
Investing in stock markets involves the risk of loss. Past performance is never a guarantee of future returns. This newsletter is intended for educational purposes only. It constitutes the general views of Fisher Investments and should not be regarded as personalized investment or tax advice or as a representation of investment performance. No assurances are made that Fisher Investments will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Not all past forecasts have been, nor future forecasts may be, as accurate as any contained herein. © 2022 Fisher Investments. All rights reserved.
Fisher Investments 401(k) Solutions is dedicated to helping small businesses and their employees reach their retirement goals. We seek to offer comprehensive 401(k) plan services that are designed to help employees optimize their retirement savings while easing the company’s risk and administrative burden.
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Featured Article
Financial scammers can target anyone. Understanding common characteristics of scams can help prepare you to spot them in advance.
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There are many types of financial fraud, but being aware of just a few common characteristics of fraud—such as unexpected solicitations with urgent action needed—can help you broadly protect yourself.
Different scams often target different demographics. Be aware of which types of fraud may be most likely to target you.
Identifying a scam in advance can help you avoid becoming a victim.
Scammers and thieves have more tools at their disposal and more access to targeting unsuspecting victims than ever before. The smartphone in your pocket. The smartwatch on your wrist. Your home laptop. All marvels of technology that constantly keep you connected to the rest of the world. But that connectivity comes at an often-unseen cost. According to the US Federal Trade Commission (FTC), consumers filed 2.1 million reports of fraud—and reported losses of more than $3.3 billion—in 2020, up from 2019’s $1.8 billion.* In order to protect your assets and prevent yourself from falling victim to financial fraud, it is important to know how to identify the different ways fraudsters target people. Understanding common characteristics of scams can help you spot them in advance and better protect yourself.
Digital scams are often facilitated through website popups or unexpected emails. They commonly share three characteristics:
Types of Financial Fraud
There are two main types of financial fraud once a scammer has obtained an individual’s personal information:
There are a multitude of scams to obtain an individual’s personal information that share these common characteristics. Many scams are facilitated through website pop-ups or “phishing,” which is fraudulent communication typically via emails, calls, and text messages, that is intended to reveal your personal information (for example: passwords and credit card numbers). New scams appear over time as technological advances open up new avenues for scammers to target potential victims. For an example of these characteristics in action, consider a common internet pop-up scam. These pop-ups alert the user of a computer issue while browsing the internet (Unexpected and Unsolicited). If the user clicks on the pop-up, they are provided a phone number to call. The representative on the phone prompts the user to quickly establish a remote connection so the representative can “diagnose the issue” (Urgently asking you to do something). The representative informs the user that their computer protection coverage had expired and needed to be renewed for $499 (Unexpected and Urgently asking you to do something). Concerned about losing their product protection, the user may either pay the false fee or otherwise jeopardize their credit card information and computer security. The best course of action for the user that encounters such a scam is to identify the characteristics of a scam, and slow the process down as they verify the credibility of the other party.
Charity and Disaster Funds
Schemes seeking donations for organizations that do little or no work—instead, the money goes to the fake charity’s creator.
Election Crimes and Security
Scams involving false voter registration or deception of qualified voters to prevent them from voting.
Health Care Fraud
Fraud by intentional deception of the health care system to receive unlawful benefits or payments.
Phishing and Spoofing Scams
Scams involving the disguise of an email address, sender name, phone number or website URL to convince you that you are interacting with a trusted source.
Ransomware
Malicious software that prevents you from accessing your computer files, systems or networks and demands you pay a ransom for their return.
Unexpected Unsolicited Urgently asks you to do something
Credit Card Fraud
Credit or debit card numbers can be obtained through unsecure internet connections or by theft of a physical card.
Identity Theft
In the digital age, having your name, Social Security number or financial account numbers stolen are all forms of identity theft.
Scams commonly start with a communication that has some or all of the below characteristics:
Unsolicited
The communication may have to do with a business or organization you interacted with at some point, but more likely it isn’t related to anything you have done or requested recently.
The scam involves a 55-year-old divorcee who creates a profile on an online dating site. In this scenario, the divorcee meets an engineer who claims he is overseas and needs funds for travel, work and medical expenses totaling $100,000. The victim agrees to the transaction. The scammer then disappears with the victim’s money.
Advance Pay
Romance
Trusted Individual/ Imposter
The table below details some of the most common scams used today:
Loans
Examples:
How to Protect Yourself:
Research online and contact the Better Business Bureau (BBB). .
Identify red flags: Too good to be true. Unexpected, unsolicited communications. Spelling and grammatical errors. Communications asking you to do something.
Consult a trusted lawyer or other professional.
Occurs when the victim pays money in anticipation of receiving something of greater value—then receives little or nothing in return. Frequently Targeted: Typically investment-minded individuals, but all demographics can be targeted.
Scammer asks victim to pay for their supposed travel expenses, surgery or other medical expeses, customs fees to retrieve something, gambling debts, visa or other travel documents. Usually paid for by wiring money or sending gift cards from vendors like Amazon, Google Play or iTunes.
Never send money to people you don’t personally know.
Be cautious of online strangers who ask you for personal or financial help.
Occurs when a criminal adopts a fake online identity to gain a victim’s affection and trust. Frequently Targeted: People with internet dating profiles and social media accounts; people aged 40 to 69 most likely to report being a victim.***
Taking funds without permission
Allow trusted individuals to have oversight.
Provide financial institutions with a trusted contact.
Set up a POA that reduces risk.
Occurs when a scammer tries to convince someone to send money by pretending to be someone they know or can trust like a relative, a government employee, or other familiar organization. Frequently Targeted: Older-age demographics.
Debt elimination
Cryptocurrency
Financial “Opportunities”
Lottery/Sweepstakes
Overcharging services
Forging/forcing signatures
Manipulating into gifting funds or property
An elderly woman suffers an injury and her neighbor offers to help with collecting her mail and buying her groceries. However, the neighbor gains access to the victim’s bank information and checkbook and steals $25,000.
General tips
General Tips
Resources
Remember three common characteristics of scam communications: Unexpected, Unsolicited, and Urgently asking you to do something. Do not widely share private or personal information. Don’t click on unknown links. Cancel compromised cards immediately. Use strong passwords and do not reuse passwords. Utilize identity theft protection services. Remember that the internet isn’t the only place where personal information can be compromised. Information can also be compromised at home and work.
Additional Resources Available to You
Fisher Investments Federal Trade Commission (FTC) Securities and Exchange Commission (SEC) Federal Bureau of Investigation (FBI) Better Business Bureau (BBB) Credit Report and Credit Monitoring Sites Local Authorities
Unexpected
This could be an out-of-the-blue phone call or email, or a text from an unrecognized phone number.
Urgently Asks You to Do Something
Requires swift action on your part. The scammer won’t want to give you time to think or research, and will try to push you to make immediate decisions.
Charity & Disaster
Ransomware is often unknowingly downloaded by opening an attachment, ad, link or website embedded with malicious code.
Be cautious about what you download and click on.
Use anti-virus software.
Keep operating systems up-to-date.
Back up your data regularly.
Occurs when a malicious software prevents you from accessing your computer files or systems and demands you pay a ransom for their return.** Frequently Targeted: People who are less tech-savvy.
Emails
Social media posts
Crowdfunding platforms
Unexpected phone calls
Verify the phone number or email you are interacting with is affiliated with the official organization you are trying to donate to.
Be wary of new organizations that claim to aid victims of recent disasters.
Give using a check or credit card if possible.
Occurs when a scammer seeks donations for an organization that instead sends the money to the scammer. Frequently Targeted: All demographics.
*Source: FTC as of 4/13/2022; https://www.ftc.gov/news-events/press-releases/2021/02/new-data-shows-ftc-received-2-2-million-fraud-reports-consumers **Source: FBI as of 4/13/2022; https://www.fbi.gov/scams-and-safety/common-scams-and-crimes/ransomware ***Source: FTC as of 4/13/2022; https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2021/02/romance-scams-take-record-dollars-2020
The victim is a 55-year-old timeshare owner who receives a call from a real estate agent claiming a buyer wants to purchase their timeshare for three times its worth. The victim agrees to the transaction. As it turns out, the purchase requires transaction and wiring fees totaling $40,000. There is no buyer.
Hypothetical Case:
A woman sees a post seemingly from her friend on social media on her mobile device. Curious about the post, she clicks on the link, which takes her to an unrecognized website. The victim doesn’t think much of it and carries on with her day. Behind the scenes, ransomware quietly downloads onto her device. Later that day, she turns her mobile device on and sees a screen message demanding payment to unlock her files.
A man learns of a crowdfunding opportunity on social media to support families impacted by the Russian invasion of Ukraine. He sends $1,000 towards the cause. However, the opportunity is fake and scammers steal the donations.
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After hitting a January 4 high, global markets tumbled into this bull market’s first correction as investors fretted rising interest rates, inflation and Vladimir Putin’s vile Ukrainian invasion. At its March 8 low, the MSCI World Index was down -13.7% before rallying to put full-quarter returns at -5.1%.* Despite the volatility, we still believe 2022 should be good for stocks, with Tech and growth stocks leading. This rocky start unnerved many, especially with the tragic Ukraine nightmare. Its images are haunting. Yet this appears as a classic correction—a sharp, predominantly sentiment-fueled drop of -10% to -20%. While we always watch for bear markets (longer, typically slower-evolving, deeper declines of -20% or worse with fundamental causes), we don’t think this is one. Like typical corrections, this decline was a steep drop off a market
If you have questions, your Retirement Counselor is delighted to hear from you. Most importantly, thank you for your confidence and for being a valued client.
*Source: FactSet, as of 4/1/2022. MSCI World Index returns with net dividends, 1/4/2022 – 3/8/2022 and 12/31/2021 – 3/31/2022. **Ibid. Statement based on comparison of 10-year Treasury and 3-month Treasury constant maturity yields. This document is intended for educational purposes only. No assurances are made that Fisher Investments will continue to hold these views, which may change at any time based on new information, analysis, or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Not all past forecasts have been, nor future forecasts may be, as accurate as any contained herein.
When 2022 began, we forecasted a nicely positive but back-end-loaded year, with early grinding volatility.
While we always watch for bear markets (longer, typically slower-evolving, deeper declines of -20% or worse with fundamental causes), we don’t think this is one.
We still believe 2022 should be good for stocks, with Tech and growth stocks leading.
We still believe 2022 should be good for stocks.
high with big scare stories that headlines quickly extrapolated into worst-case scenarios. Excluding 2020’s lockdown-driven (and correction-like) downturn, bear markets usually start much more gradually, with investors much more complacent—even dismissive. The central cause snowballs unnoticed, getting scant attention until far later in the downturn. By contrast, corrections strike and recover quickly, although neither happen in straight lines. Stocks usually move on to material up moves afterwards.
When 2022 began, we forecast a nicely positive but back-end-loaded year, with early grinding volatility. We still believe this is most likely, hard as it may be to fathom after a difficult quarter. All those suffering from the war have our deepest sympathies. Yet neither Putin’s invasion nor sanctions’ fallout changes our market outlook. While the human toll will last for years—with the damage to so many irreparable—for stocks, this too shall pass. There is a very long history of regional wars and corrections. It is a classic form. Corrections often end with a V-shaped bottom. Perhaps we are on the right side of that now. Or, perhaps this will have a W-shaped bottom, delaying the rebound briefly with another brief down spurt ahead. Either way, we remain optimistic about this year and don’t see recent volatility as a reason to avoid stocks. Corrections are normal in bull markets and for investors who need equity-like returns to finance their long-term goals and objectives, we think volatility like this is unavoidable.
While the human toll will last for years—with the damage to so many irreparable—for stocks, this too shall pass. There is a very long history of regional wars and corrections.
The war’s chief impact, in our view, is to extend some of the dislocations weighing on sentiment and triggering inflation even before Russia invaded Ukraine, as sanctions and conflict divert shipping and sent commodity prices rising on fear of shortages. Yet these issues aren’t insurmountable for stocks. The MSCI World and S&P 500 are both nicely positive since February 24, the day Putin invaded. Trust the market. Always remember: Stocks don’t need perfection. Objectively negative realities aren’t always negative for stocks, especially if they don’t go as badly as feared. Consider inflation. Due to high oil and gas prices stemming from the war, inflation likely
peaks higher and stays elevated longer than we initially expected. Objectively, this is bad, creating hardship and forcing people into tough choices. Yet the economy has already proven strong enough to absorb the hit. Large growth stocks’ gross operating profit margins remain fat. Inflation-adjusted spending remains firm. Business surveys globally show strong activity, with higher input costs hitting sentiment more than output—even in Europe, which is the most vulnerable major region to the war and sanctions’ economic dislocations. If the war’s fallout were to drive a global recession, Europe would show it first. But data suggest Europe is faring better economically than most assumed. If Europe doesn’t contract, the chances of Ukraine driving a global recession are low. Slower growth is almost certain. That doesn’t stop stocks. We have long expected growth to slow after the initial COVID reopening surge.
Long-term interest rates’ rise is the other big fear—frequently cited as negative, especially for growth stocks. Yet reality suggests otherwise. One, growth stocks have a long history of rallying alongside higher long rates. Two, higher long rates steepened the yield curve—a positive economic signal.* If recession were nigh, we would expect an inverted yield curve, with 3-month rates exceeding 10-year. As we will detail, while many fret inversions at other less-important segments of the yield curve, like the wrongly ballyhooed 2-year to 10-year spread, the most meaningful spread is wider today than at 2022’s outset. Amazingly, this remains largely unnoticed.
How long war-intensified disruptions will last is unknowable. Eventually, though, they should fade alongside rising US political clarity from the midterms, which should create full tilt, hardcore gridlock—bringing benefits that have a long reality of positively surprising almost everyone as they induce political calmness. This usually generates a late-year rally. Maybe this correction accelerates the rally’s arrival. Of course, we are monitoring risks to this outlook. We could change our views if we saw a huge enough negative shock to have us believe a bear market was underway. But, for now, we see nothing with the size and surprise for that. - The Investment Policy Committee
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Keep Track of the Five Ws
Let’s face it: With all of the distractions and demands of daily life, your 401(k) may not be constantly front of mind. If this rings true for you, rest assured—you are not alone! But so long as you know the basics and have appropriate investments, you may not need to review your account very often. Instead, review the following questions to make sure your 401(k) is on track and you aren’t missing anything big.
Every 6-12 months is perfectly healthy for scheduled check-ins.
When should I check in on my account?
Your 401(k) is administered by someone within your company—often someone in HR or a leadership position—with the support of a few financial and administrative service providers. Fisher Investments manages your plan’s investment fund lineup and can help with most of your 401(k) needs, including loans, distributions, and combining old accounts. When necessary, we can coordinate and advocate with other service providers. Fisher’s dedicated service team is ready and willing to assist on a direct line during normal business hours.
Bookmark the website in your browser and keep a record of your 401(k) login information, as it can be easy to forget this information if you rarely review your 401(k). If you are having trouble accessing your account or making updates, Fisher 401(k)’s Service team can assist you.
As mentioned, you do not need to review your 401(k) daily. Unless you have a life event that warrants a change, every 6 – 12 months is usually fine; any shorter is likely unnecessary and any longer can run the risk of your information or investments becoming outdated. Holding a brief review of your account and life situation with a Fisher 401(k) Service Team member can help you stay in the driver’s seat of your retirement.
WHAT IS the right asset allocation for my goals and situation?
There is no blanket answer, but generally, owning more stock-based investments makes sense when retirement is a long way off, and gradually mixing in more bond investments makes sense as retirement gets closer. In order to find your investment mix, Fisher has a retirement calculator that is customizable to your individual situation and will give you an idea of your projected savings surplus or shortfall in retirement. If you'd like, a Fisher 401(k) Retirement Specialist can help walk you through the calculator and your options.
Call today to schedule a meeting with a Retirement Specialist.
Why is investing important?
The goal should be to have your money working to earn you more money by investing it in the market, which helps build your nest egg for retirement. The sooner you get invested, the more you will reap the benefits of the time value of money when your retirement arrives. A Federal Reserve report on the economic well-being of U.S. households in 2020-2021 found less than half of adults younger than 59 felt on track for retirement.* So, while it isn’t uncommon to be behind on retirement savings, it is important to take the steps today to secure a better future.
The time value of money (TVM) is the principle that a sum of money is worth more now than it will be in the future due to its earnings potential, which is realized through investing it.
While your 401(k) may not always be front of mind, it is important to make sure you are fully aware of account-related items that can impact the health of your future retirement. Call today to speak with a Fisher 401(k) Retirement Specialist.
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*Source: https://www.federalreserve.gov/publications/2021-economic-well-being-of-us-households-in-2020-retirement.htm
With the Fisher Investments online Retirement Calculator, you can see a snapshot of what your retirement savings may look like if you follow your current path. This highly interactive tool allows you to toggle levers to quickly see how changes to your savings strategies may impact your retirement readiness. You can project your potential monthly surplus or shortfall in retirement by inputting your salary, the age you plan to retire and more—offering results uniquely tailored to your situation to help you realize the retirement you want. Your monthly surplus or shortfall are estimates based on your retirement income and expenses (a surplus is having more income than you will need whereas a shortfall is having less income than you will need). If you’d like to schedule a walkthrough of Fisher Investments’ Retirement Calculator, call today to speak with a Retirement Specialist at 888-322-7586.
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